MUMBAI: India's oldest and premier stock exchange BSE is planning an initial public offering ( IPO) in the first half of 2013, said BSE chairman at its annual general meeting (AGM) held on Friday.

The bourse has formed a committee to finalise the public issue, but the final decision to float the issue will be based on market conditions, said BSE non-executive chairman S Ramadorai.

"The DRHP will be final in the next 7-9 months. A final decision will be taken based on market sentiments," said Ramadorai in the AGM, which was a stormy affair as the exchange's shareholders raised concerns over its falling market share and scepticism over its strategy ahead of the entry of new stock exchange - MCX-SX.

Shareholders have also raised questions about the progress of BSE's ongoing market-making scheme to boost its derivatives segment.

The exchange's liquidity enhancement scheme, worth about Rs 60 crore till March 2012, which was launched last year, has lifted activity in its futures and options segment, but it has not been able to attract a wider base of investors.

"The exchange has spent around Rs 45 crore for acquiring Marketplace Technologies and around Rs 60 crore on the liquidity enhancement scheme. However, the benefits are not visible," said a shareholder. "It also acquired 15 per cent in United Stock Exchange (USE). Kindly see the reserves are not frittered away," he added.

Ashishkumar Chauhan, BSE's interim CEO, told shareholders that a new CEO has been appointed for USE.

Talking about the liquidity enhancement scheme, he said it has worked well and helped us gain market share. "Incentive, as part of the turnover, has gone down to miniscule levels," Chauhan added.

Assuring shareholders that efforts are on to improve the exchange's turnover, Ramadorai also said that a selection committee has been set up for the appointment of a CEO. The Bombay Stock Exchange's hief execcutive officer's post has been vacant after Madhu Kannan quit the exchange to join Tata Group.

Responding to veteran broker KR Choksey's query on how the exchange is preparing to compete with MCX-SX, Chauhan said, "When new exchanges come, they make a lot of noise. But BSE will be at the forefront. We will work to get our fair share. The exchange is trying to reduce the cost of trading."

In response to a proposal from a shareholder to merge BSE with MCX, Chauhan said, "This issue will be considered at a different time and forum."

The AGM also marked the exit of three trading member directors-Uttam Bagri, Deena Mehta and Anil Shah- from the BSE board because new Sebi norms bar induction of trading members on the stock exchange boards.